Break-even Analysis - Part 2 - MCQs with answers

Break-even Analysis - Part 2 - MCQs with answers


1. The term marginal cost can be used as a substitute of variable cost while measuring Contribution.

a) True
b) False

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ANSWER: a) True



2. Determine total as well as per unit contribution if Sales is Rs 40,000, Sales in units is 4,000 and variable cost is Rs 30,000.

a) Rs 10,000 and Rs 2.5
b) Rs 70,000 and Rs 3.5
c) Rs 36,000 and Rs 3.6
d) None of the above

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ANSWER: a) Rs 10,000 and Rs 2.5



3. Determine Contribution if Sales is Rs 1,50,000 and P/V ratio is 40%.

a) Rs 60,000
b) Rs 70,000
c) Rs 30,000
d) None of the above

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ANSWER: a) Rs 60,000



4. Determine Contribution if Fixed cost is Rs 40,000 and profit is Rs 30,000.

a) Rs 60,000
b) Rs 70,000
c) Rs 30,000
d) None of the above

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ANSWER: b) Rs 70,000



5. Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs 20,000.

a) Rs 60,000
b) Rs 70,000
c) Rs 30,000
d) None of the above

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ANSWER: c) Rs 30,000



6. Contribution and profit both are same concepts.

a) True
b) False

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ANSWER: b) False



7. Which of the following statements are true?

a) Contribution doesn’t include fixed cost whereas profit includes fixed cost.

b) Contribution is not based on the concept of marginal cost.

c) Contribution above breakeven point becomes profit.

d) All of the above

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ANSWER: c) Contribution above breakeven point becomes profit.



8. Profit-Volume ratio is also known as

a) Contribution ratio
b) Contribution/Sales ratio
c) Marginal Income percentage
d) All of the above

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ANSWER: d) All of the above



9. Which of the following statements are true?

a) P/V Ratio can never be used to measure break-even point

b) Higher the P/V ratio less will be the profit and vice versa

c) Concept of P/V ratio is also used to determine profit at a given volume of sales

d) All of the above

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ANSWER: c) Concept of P/V ratio is also used to determine profit at a given volume of sales



10. The P/V ratio can be improved by

a) Decreasing the selling price per unit
b) Increasing variable cost
c) Changing the sales mix
d) None of the above

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ANSWER: c) Changing the sales mix


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